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The Job Guarantee and the MMT Core: Part Nine, The Wrong Goal?

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Earlier in this series, here, here, and here, I discussed and critiqued an earlier post of Cullen Roche's expressing his criticisms of the Job Guarantee (JG) policy advocated by MMT economists, and contending that the JG proposal wasn't core to MMT. In the previous eight parts of this series I've argued against that view in the context of a blogosphere explosion on the subject. Since the earlier post I addressed, however, Cullen has spilled a lot more electronic ink trying to make his case. Specifically, he's offered four new posts on the subject. In my next few posts I'll review these new efforts, beginning with his conversation with Warren Mosler.

He begins:

“Anyhow, Warren and I had a nice exchange and we agree far more than recent debate has likely implied. We’re just sort of on a different page about how we should meet our goals. . . . ”

Differences in Normative Structures

Here, Cullen suggests that his difference with Warren Mosler is only about means, and that they share the same goals, so that their differences are small. But, Warren is very plain in his book that he considers “public purpose” to be the overall standard that guides his thinking, and that he thinks that two essential aspects of public purpose that economic policy should fulfill are full employment with price stability. But nowhere in this or earlier posts does Cullen express agreement with these normative basics of MMT. As I pointed out here and here, part of the reason why Cullen doesn't agree with Warren and the academics who developed MMT is because he doesn't share these normative views. So his disagreement is not a small thing (which Warren confirms in this dialogue), however much he may want to minimize it. It goes to the core of the policy side of MMT.

Also, Cullen speaks to this disagreement on goals later on in his post on the conversation. He says that he's for “prosperity, increasing living standards, and says that subsidiary goals are innovation, increasing productivity, and a “real goal” of “full productivity.” He also says that:

“. . . . massive increases in living standards come from increases in innovation and productivity (which are MOSTLY pvt sector and profit driven). So my thinking is rather basic. Why obsess over FE (I am referring to low unemployment here) when the real goal is full productivity (which is a vague concept I know)?”

“Full Productivity” (FP) is a vague concept, but, in addition, prosperity is only one dimension of public purpose. Why should we accept it as the primary standard, along with increases in living standards coming from increases in innovation and productivity leading to “ full productivity”? Why does Cullen propose that our goals should be these rather than “public purpose”?

After all, public purpose can include full employment at a living wage for all who want to work with price stability, prosperity (including innovation and increasing productivity), freedom, environmental sustainability, political, economic and social justice, renewal of our individual rights under the constitution, decreasing economic inequality with increasing economic opportunity for all, fair elections free from the power of money, and more generally the list of things FDR laid out in his second bill of rights. But “prosperity” is a much narrower goal, than “public purpose,” so why should we agree with Cullen that this, alone, is our goal? And if we don't, then doesn't Cullen's whole case fall to the ground?

Cullen continues by saying “. . . that perhaps” FE is “ the wrong goal to have . . . “ because we know we can have prosperity with a UE buffer stock, but we don't know if it's possible to have it with an FE buffer stock on a “long-term multi-generational” basis, and he concludes his argument with:

“So a lot of this comes down to potential downsides of employing workers in the JG (some excellent questions were asked here) versus leaving them unemployed. One of the big problems with the JG is that it has never been done in any mass scale that has resulted in prosperity over any multi-generational period. So, it’s very hard to prove that the JG can work because it has never worked in the past. What we know has worked is having an unemployment buffer stock. We know for a fact that human beings can achieve enormous prosperity despite unemployed people."

I've already examined the argument that an unemployed buffer stock has worked in the past in creating prosperity here and here. While I agree that many of us have been prosperous while unemployment remained high. There's no evidence suggesting that our unemployed buffer stock was somehow a positive factor in creating and maintaining this prosperity, and there's also the fact people who were part of the UE buffer stock didn't share in “prosperity.” In other words, there's no evidence that a UE buffer stock “worked” to create prosperity, or that whatever prosperity existed was not created in spite of it, or reduced due to it. We only know that UE buffer stocks have accompanied prosperity for those who were prosperous. Correlation, we all know, is not causation, nor does it even indicate a necessary condition for an outcome.

Unfair Comparison

This doesn’t make this the optimal position and it doesn’t mean we shouldn’t strive for full employment, but what if the approach of plugging in the unemployment hole via government workers is the wrong approach? . . . What if there is an optimal way to leverage the government’s monopoly supplier powers that doesn’t involve unproven and potential downside risks? . . . ”

First, up until this statement, Cullen's view has been that FE is the wrong goal to have, which, I think, does imply that we should not strive for it. Instead, he suggests that we should strive for FP, and that he expects that if we reach it, that will create FE as a side effect.

Second, in asking for “. . . an optimal way to leverage the government’s monopoly supplier powers that doesn’t involve unproven and potential downside risks? . . . ” Cullen is asking for the impossible. Every new fiscal policy the Government may select will involve unanticipated consequences and “unproven and potential down side risks,” since the economy isn't a mechanism, but a complex adaptive system. For that matter, even continuing old policies involves such risks, since the future is often not like the past in such systems.

Third, in asking what if the approach of direct Government job creation through a JG is the wrong approach, I think Cullen is using a biased frame, because it is much too narrow in scope and doesn't even make a minimal attempt at fair comparison of alternative policies.

A Fair Comparison Approach

A more unbiased approach to prospective policy evaluation would be something like the following.

Given these choices:

1. Creating and implementing a JG with a living wage and full benefits program to achieve an FE buffer stock within the context of other MMT stimulative fiscal policies such as payroll tax cuts, State revenue sharing, and infrastructure;

2. Creating a set of programs to achieve FP within the context of other MMT fiscal policies, while maintaining a UE buffer stock;

a) which of these alternative courses of action is most likely to produce the most progress toward public purpose, the best balance of benefits to costs across the various dimensions of public purpose, given an agreed upon time frame; and, b) in addition, what is the risk of error of each of these alternatives in the context of the others assuming we choose it as the best of the decisions to implement?

Continuing the Present Fiscal Policies

We know that the third of these alternatives is likely to have the highest costs among the three, because we've seen these in the past few years. Bill Mitchell lists them again in a recent post:

It is well documented that sustained unemployment imposes significant economic, personal and social costs that include:

-- loss of current output;
-- social exclusion and the loss of freedom;
-- skill loss;
-- psychological harm;
-- ill health and reduced life expectancy;
-- loss of motivation;
-- the undermining of human relations and family life;
-- racial and gender inequality; and
-- loss of social values and responsibility.

To which Bill might have added other likely effects, such as:

-- increased economic inequality;
-- increased poverty;
-- increasing crime rates
-- increased anger against an elite that gets more and more and more wealthy;
-- increased political inequality undermining democracy;
-- possible increasing political violence in major American urban areas.

As far as benefits of the present course are concerned, these will depend on other occurrences, for example the possibility of another bank crash spreading from a European collapse. If that happens, then reliance on a UE buffer stock will accelerate a very rapid downward plunge into a depression and erase all likely benefits of continuing current policies, the costs will be like those most Americans paid in the 1930s, and the risks of political extremism and civil strife will be very great.

So, it seems that the likely benefits of continuing the present course are very hard to name or underwhelming for most Americans; while the likely costs associated with it are very high. On the other hand, if we project these results, the risk of error associated with this theory is relatively small because we've had plenty of experience in recent years seeing things turn out this way using the fiscal policies being followed by the Administration and Congress.

Cullen's FP/UE/”MMT” Alternative

But what if we follow the FP/UE/”MMT” stimulus alternative, then what are the benefits and costs likely to be associated with that?

Benefit possibilities:

-- the ability to produce material goods at much lower cost than today, thus increasing business profits to unprecedented levels;
-- the ability to reduce work hours substantially while producing all our material needs;
-- the ability to provide renewable energy at costs competitive with fossil fuels today;
-- the re-invention and enriching of our societal infrastructure at lower costs
-- the invention and dispersion of new electronic and computing devices that can enrich our lives in various ways
-- greater profits for business than ever before
-- greater AD injected into the economy through payroll tax cuts; State revenue sharing; and deficit spending on infrastructure and new technological developments

And possible costs:
-- continued recession and high unemployment rates, due to a failure to pass any productivity gains along to employees, and accumulation of new AD in the hands of higher income people;
-- faster trading than ever, giving technologically advanced investors and traders advantages over everyone else;
-- further concentration in business as large corporations leverage productivity gains and accumulate new technology innovations for their own use;
-- further decline in middle class purchasing power as wealth concentrates in a smaller and smaller group, preventing full recovery and resulting the need for continued deficit spending;
-- plus all the costs listed for alternative one by Bill Mitchell and myself.

These benefits and costs are possibilities. To compare alternatives we have to assess the probabilities of both positive and negative outcomes and also assign values to the benefits and costs. We may make errors either in listing the outcomes, assessing the probabilities or assigning the values. If we err we may very well make the wrong selection of an alternative, and buy the negative consequences of that choice, including unanticipated costs of our error.

In arguing for his FP/UE/”MMT” alternative, have we seen an analysis even remotely like this sort of fair comparison of alternatives from Cullen? The answer is no. He does some “handwaving” about benefits and about the costs of continuing with a UE buffer stock not preventing "propserity." But his analysis is very vague, even though, if we take him seriously and select his alternative, the probability of serious consequences for millions of people looking for jobs is very high.

-- One-time price adjustment upward if JG wage is set too high;
-- Decrease in legitimacy of program if JG wage is too low
-- Shock to business from higher wage costs causing price adjustments upward
-- Administrative failures resulting in unpopularity of JG program
-- Lack of fit of available JG and private sector jobs to available skills
-- Substantial inflation
-- Slower or less new technological innovation

In all three cases above the possible benefits and costs may occur. To compare the alternatives one needs to assign probabilities to the possibilities and also values to the outcomes to really do a good job of selecting among them.

But here are some things to consider for a loose ball park assessment. The negatives of a UE buffer stock are pretty well-established, and if the FP/UE/”MMT” alternative is selected, then the probability of many of the negatives listed occurring seems pretty high, along with the negative values of the outcomes (risks), while a lot of the benefits may be less than high probability, but have high value (opportunities).

For the FE/JG/MMT alternative, many of the benefits seem to be very high probability, while some of the costs are lower probability and some of the values are much less negative than the values associated with the negatives in the other alternatives.

What if I've erred in this assessment? Then the most likely error is in the choice between the second and third alternatives, since the first one is the slow boat to plutocracy city. If I act on the third (FE/JG/MMT) and the second is true, then what is the consequence of the error? There may or may not be less technological progress, somewhat more inflation, and higher dissatisfaction with the bureaucracy, but there will still likely be near full employment and the worst consequences of the UE buffer stock will have been avoided.

On the other hand, what if I act on the FP/UE/”MMT” alternative, and the FE/JG/MMT alternative is true, then I will have condemned millions of people to unemployment, poverty, and lack of opportunity for the sake of pursuing and perhaps not achieving FP.

The Bottom Line?

Cullen Roche asked the risk of error question in connection with the FE/JG/MMT alternative; but didn't ask it in connection with the other two alternatives. That's why I said that he was failing in his duty of fair comparison.

But, if you ask the question in connection with all three alternatives, then it looks like both the conjectured “real” risk and the risk of error are much less with the FE/JG/MMT alternative than with either of the other two. So, I don't think raising that question benefits Cullen's argument, so much as it calls it into question even more.

But the worst thing here, I think, is that my analysis lays bare the lack of it Cullen has given to the full productivity idea, at least in "print." Cullen says that FP should be our goal, but he hasn't really told us what “full productivity” is. Until he does that his proposal for abandoning public purpose and the normative structure under that goal including FE with a living wage, and price stability, to pursue FP will really seem blue sky to me and perhaps other MMT writers as well, and will have the feel of a political slogan, rather than an economic goal that we ought to pursue.

Comments

Referring to unemployed people as a UE buffer stock is demeaning to them. It is a way of quantizing them, turning them from people into a variable. And it is a lot easier to play with and dismiss a variable than it is millions of Americans. Talking about dislocations, sectoral adjustments, jobless recoveries, etc. allows economists to sound objective when what they are really doing is objectifying millions so that they, the economists, don't have to take responsibility for the consequences of their theories.

To be honest, I have no idea what "prosperity with a UE buffer stock" even means. Is this some reference to the "jobless recoveries" of the 2000s? Because that prosperity was just the upside of bubbles, and it was at the end of massive transfers of wealth from the poor and middle class to the rich. How in a context of great wealth inequality can anyone even talk about prosperity? Over the last 35 years, we have seen the construction of kleptocracy, again what possible meaning can prosperity have with regard to an expanding system of general looting? And before that you have a period where poverty was high. So how does "prosperity with a UE stock" fit into that? Go earlier and you run into the bubbles of the Roaring Twenties, the Depression of the 30s, World War II, and a period where the US had an intact industrial base while Europe's and Japan's lay in ruins. So my questions are where exactly and for how long did we see "prosperity with a UE buffer stock". This is another common failing of economics. Most of the time economics pretends that history doesn't exist, but even when it does, it cherrypicks it both with regard to time and scope.

Choose a conducive timeframe, ignore the big picture, and you've got the makings of an economist's argument, and it can be a very dishonest argument. "Prosperity with a UE stock" is an oxymoron. Out here in the real world, we know that keeping people unemployed is a means for driving wages and benefits down and that is, no matter how it is defined, the exact opposite of "prosperity".

Peeling the onion back further, look at unemployment. The BLS reports a U-3 unemployment rate of 8.5%, but it does so by defining millions of Americans out of the labor force, 7.1 million by my count. Add these back in and the unemployment rate goes to 12.7%. Similarly, the broader U-6 measure of un- and underemployment is 15.2%, but add back in those the BLS has stopped counting and that yields a disemployment rate of 18%. This is yet another failing of economics. Just because the U-3 is the "official" unemployment rate doesn't mean that it corresponds to what most people, and even most economists, think of as the unemployed. The BLS definition doesn't measure the unemployed but a subset of them, those recently looking for work. So you could be wanting a job, have looked for one say 5 weeks before the Household data was collected and the BLS would still not count you as unemployed or in the labor force.

It's what I call defining down the problem. Economists don't focus on the real size of the problem: 18% (at least) disemployment. They more than halve it by jumping straight to the 8.5% U-3 official unemployment rate. And then they add kickers. Even Stiglitz just a couple of days ago: http://www.project-syndicate.org/comment... had thrown in the towel and was tacitly accepting a structural level of unemployment of 6% to 7%. Take 7% and the difference between that and 8.5%, and that represents about 2 million people, not the 28.5 million of the disemployed.

A problem affecting 2 million is still a problem, but it isn't an emergency. Even if you take the 6% figure, that's 3.3 million, bigger but still not requiring extraordinary measures. If you look at the world this way, and most of our elites do, you can see why jobs guarantees or indeed jobs programs at all get either no priority or low priority. Our elites haven't solved the problem. They have defined it out, or very nearly out, of existence. If, on the other hand, you look at it from the real world where these 28.5 million live, and most economists do not, you see the true scope of the waste and human tragedy, as well as the callousness and criminal complicity of modern economists.

MMT economists use the contrast between an FE buffer stock and a UE buffer stock to try to get other economists to see that it is wrong to use a UE buffer stock as a way of fighting inflation, when you could just as easily do the right thing and use an FE buffer stock. Personally I think Cullen Roche's preference for a UE buffer stock and his emphasis on "prosperity" w/ UE, is just morally wrong, and certainly inconsistent with MMT's emphasis on public purpose.

1. a full fica suspension to restore demand/sales/jobs
2. 150 billion one time federal revenue distribution to the states on a per capita basis
to get them over the hump
3. an $8/hr federally funded transition job for anyone willing and able to work to
facilitate the transition from unemployment to private sector employment as
aggregate demand picks up.

the third is what's called the 'jg'.
I've also point out that 'fundamentally' it's the base case for monopoly in general,
and for our fiat monetary system, which is fundamentally a simple public monopoly.

Monopolists are what's known as 'price setters' as, for all practical purposes, they set price and let quantity adjust.

For the state, the currency monopolist, this means after he levies a tax, as the monopoly supplier of what the economy needs to pay the tax, he directly or indirectly sets the terms of exchange for his currency. That is, one way or another, he has to decide what he is going to pay for something, as, at that point, there is no way the economy can give him any feed back on what he 'should' charge for anything.
In fact, what matters is the need/public purpose/etc. of the state.

My simple example is to imagine the state wants to hire 10 people so he sets a real estate tax of 100 and then offers to pay 10 for anyone who wants to work. He can then calculate that he'll get at least 10 people to work to earn the 100 the economy needs, and maybe a few more if for any reason the economy wants to net save a few.

I really appreciate it. I think a lot of people here, including myself, as well as some UMKC MMT economists, and maybe Bill, as well, disagree about the JG wage rate, and prefer a living wage for the JG. I've reviewed the disagreements and made my own proposal here.

Please explain why you prefer the $8.00 per hour rate and also why Randy, Stephanie, Pavlina, and, maybe Bill, apparently disagree. That is, what are the issues dividing the core MMT group on the JG wage rate question and why mine is the wrong proposal?

Also, please explain why Randy is now advocating $1200 per person one-time revenue sharing distribution, in contrast to your own $500 per person. Both of you agree on MMT principles. So, why the difference in policy advocacy? What differences in reasoning explain this very large policy gap?

Also, in answering, please don't address the political feasibility question, since I'm more interested in what's the right policy to advocate from a public purpose point of view. Once we decide on that, then we can talk about political feasibility and messaging, as necessary.

I selected $8 to be minimize disruption to the private sector. At $12, for example, you might drain all the fast food chains of employees, with 25 million people storming the govt. employment offices. I've heard supporters of a higher wage respond with 'let them be forced to pay more to keep their employees' and the like.

To that I respond that if govt. decides it served public purpose to increase costs of firms that hire at less than $12 per hour they can certainly do it that way. But that's a different matter entirely, as, in fact, govt. has decided not to do that, as evidenced by the current level of the minimum wage. So while I recognize the merits of higher real minimum wages, I also recognize that the JG and the decision over what the minimum wage should be are two separate things. So given the minimum wage is where it is, seems to me the right wage to introduce the JG is about $8/hr. That is, once introduced, the JG becomes the de facto minimum wage, so for openers it should be just sustain the current minimum wage about where it is. And while $8 is a tad above the current minimum wage, it's my understanding that most of the 'real' low paid jobs pay $9/hr or more, hence the belief that $8 wont' be 'disruptive'.

Once the $8 jg is in place, past efforts to hike the minimum wage can then be shifted to hiking the jg wage. Seems the chance of success would be higher as it would not so much be about enforcing what anyone else pays, as is the case with the current minimum wage enforcement. In fact, with jg, the effort could be to hike the jg wage without any discussion about a legal minimum wage.

As for the distribution to the states, $500 per capita is about the size of their annual deficits last year, which is how I came up with the number. Once the economy recovers their revenues from state taxes will be restored, so they should be ok from there. If not, there can always be another distribution if it is seen to serve public purpose. So I don't see it as a policy gap, just a difference in strategy. I see no harm in $500 now, and then taking another look 6 months down the road.

"I selected $8 to be minimize disruption to the private sector. At $12, for example, you might drain all the fast food chains of employees, with 25 million people storming the govt. employment offices. I've heard supporters of a higher wage respond with 'let them be forced to pay more to keep their employees' and the like."

Well, I wouldn't put it that way. I'd say instead that we need to stop the subsidies that business gets from working people in the form of sub-living wages. Businesses that can't pay a living wage and good benefits shouldn't be in business, in my view. Also, why is it important to minimize disruption of businesses that are not paying people a living wage? Why do we need them for the "public purpose"? Why isn't it better for people to be working for a living wage on projects that remake our country, its public facilities, its infrastructure, its energy foundations, its environment, and its heath care systems? I think all of that kind of work is much more valuable to almost everyone than keeping the fast food empires open, or the department stores, the Walmarts, or all the other businesses that pay non-living wages to people forced to take them because we're maintaining an unemployed buffer stock, rather than an employed one.

Also, since your program also calls for payroll tax cuts and State Revenue Sharing, there will be plenty of stimulus going into the economy from the cuts and the revenue sharing, especially if we set the amount at $1200 per person as Randy's suggested. Since it will take months for the JG to get going, I think the fast food chains and other retail businesses will be getting a boost before they hit the wage competition from the JG, and that they and others will be hiring, and getting increased sales and profits. When the JG gets out there, there may no longer be 25 million people without jobs, with only part-time jobs.

As the JG staffs up, also, the demand it creates will continue boosting the private sector with increased sales. To accommodate those sales, the private sector will need more employees, and that's when it will start having to offer pay and benefits at a higher level than the JG.

I'd like to see this process modeled with a time dimension; but my guess is that no more than 10 million will "mob" the JG offices at the peak, and that after people go on the rolls, they'll be creating a multiplier of 1.7 or so that will fuel private sector expansion further, leading to a reduction in the JG employees to a much smaller number over 6 months, say 4 million people left in the JG pool by the end of a year and gradually reducing in number after that.

I can't support this story; it's just a guess. But my point here, is that we need some people to do some credible simulations about what would happen given variations on your basic MMT policy program, like different JG rates and different State Revenue sharing amounts. Too much is at stake to rely only on a gut feeling about the proper rates and levels in these two categories.

"To that I respond that if govt. decides it served public purpose to increase costs of firms that hire at less than $12 per hour they can certainly do it that way. But that's a different matter entirely, as, in fact, govt. has decided not to do that, as evidenced by the current level of the minimum wage.. . . "

Right now, previous Government decisions have resulted in no JG at all. So, does that mean we should just accept that and not propose a JG?

I think the way to frame the issue is full employment with "a living wage." That's "Public Purpose." And how we implement that idea should not be some compromise that's too careful for fear of disrupting existing businesses.

The question is: "what's a living wage?" And the answer is that it's not $8.00 per hour anywhere in the US. It might be $10.00 per hour somewhere in the rural areas of Kansas, Iowa, Nebraska, Minnesota, or North Dakota, but in Washington DC it's probably $18.00 per hour, and in New York City, it's probably $24.00 per hour. So, I think the JG needs to deliver wages like that and then let business adjust as it will.

We really, really need to end the days when the economic system is rigged to allow the people who run and manage businesses to profit unfairly from the labor of wage earners. The productivity gains of the past 40 years have to be shared, finally, with the working people, whose wages have been depressed by a variety of factors since the mid-70s. People need economic and social justice now. It's not good enough to follow a program that will take another 35 years to repair the damage done in the past 35.

So while I recognize the merits of higher real minimum wages, I also recognize that the JG and the decision over what the minimum wage should be are two separate things. So given the minimum wage is where it is, seems to me the right wage to introduce the JG is about $8/hr. That is, once introduced, the JG becomes the de facto minimum wage, so for openers it should be just sustain the current minimum wage about where it is. And while $8 is a tad above the current minimum wage, it's my understanding that most of the 'real' low paid jobs pay $9/hr or more, hence the belief that $8 wont' be 'disruptive'.

I can't agree that it's a good idea to separate these issues. Putting a JG in at less than a living wage will have a damaging effect on the JG and MMT. No one will think the $8 per hour JG wage is "fair." People will view it as "workfare," and "forced labor" because they'll still need second and third jobs to make ends meet. The end result is that MMT and the JG won't gain in credibility, but will be viewed as just another government program designed to keep the lid on and make the world safe for Wall Street and the 1%

If we tell people about MMT and tell them that they need not worry about the deficit or the debt or Government solvency, and we also tell them that in spite of the fact that we are not running out of money we can't afford to have the JG at a living wage, but must restrict it to subsistence because not doing so will be too disruptive to McDonald's and to Burger King, then they will laugh at us.

We will alienate the conservative puritan vote, because they will be opposed to the JG in principle, and we will also alienate the progressive vote because if they accept that we are right about the Government having no solvency problem then they will be very dissatisfied with the view that we can't afford to pay a living wage to people willing to work for it.

Once the $8 jg is in place, past efforts to hike the minimum wage can then be shifted to hiking the jg wage. Seems the chance of success would be higher as it would not so much be about enforcing what anyone else pays, as is the case with the current minimum wage enforcement. In fact, with jg, the effort could be to hike the jg wage without any discussion about a legal minimum wage.

If we do get a President who will go with MMT, then that person is going to have to get the whole program, including the JG, right the first time, because that's when the political power will exist to implement the changes. Later on, when the economy has improved enough that only 5 - 6% of people are on the JG, the political support for the JG will weaken, and it will be hard to get that minimum raised because businesses will argue that a higher JG wage will be "disruptive" for them.

So, the "it will be disruptive" argument will be just as or stronger later than it is when the JG gets its political main chance. I think that when that chance comes we have to strike as hard as we can to get a JG that will prove its effectiveness.

As for the distribution to the states, $500 per capita is about the size of their annual deficits last year, which is how I came up with the number. Once the economy recovers their revenues from state taxes will be restored, so they should be ok from there. If not, there can always be another distribution if it is seen to serve public purpose. So I don't see it as a policy gap, just a difference in strategy. I see no harm in $500 now, and then taking another look 6 months down the road.

Again, I think the support for the MMT program will come at a critical moment when some President is willing to try it. At that point we get one shot at it. We've got to get it right!

If we do, then we'll be able to come back 6 months later and refine things. But if we fail the first time because we're too cautious, then we'll never get a second chance!

I think we need to know more about how we can rationally choose what combination of MMT measures will create FS and PS. Where are the simulation studies providing clear answers to the questions I've raised and others may have?

What are the reasons Randy, Pavlina, Stephanie, and Bill, have for proposing either higher revenue sharing numbers than you're proposing, or, at least a JG at a living wage? The gap in proposals within the professional MMT group is getting increasingly wider as time passes. It would really be good if popularizers like myself knew the reasons for the differences to help us decide which proposal to support.

Thanks again, for taking the time to answer my questions. I hope you'll keep on exchanging, because we really need to understand the reasons why MMT researchers have different views on the JG rate and revenue sharing questions

"So asking congress to fund a transition job and at the same time asking them to hike the min wage to a level they wouldn't pass otherwise doesn't make sense to me?

It risks not getting passed due to the wage, where it may have been passed at the $8 level."

The only way Congress will pass a variant of your MMT program is if a mass political movement e.g. OWS, pressures Congress and the President into passing a full employment program. If the movement is successful in doing that it may very well be able to get Congress to pass a living JG wage as well.

My point is that you cannot say today what the risk in trying to pass a JG with a living wage will be then. It may not be materially greater at that point than the risk involved in trying to pass the JG alone at the subsistence wage of $8.00 per hour. You're assuming that the progressives of that future time will prefer a JG with a subsistence wage to any other alternative and so will vote to pass the JG at $8.00 per hour.

But you can't assume that. They may well prefer to pass a more generous basic income guarantee (BIG), or even a subsistence basic income guarantee, to passing what they will consider to be a "workfare" program. So paradoxically the risk of failure if one tries to pass the JG at a subsistence wage may be greater than the risk of failure of trying to pass a JG with a living wage.

Risks at some future time when the political climate will be more favorable are very hard to assess, but what we do know is that the public purpose is served by a JG with a living wage

It is not so clear that it is served by a JG with a subsistence wage. Since MMT is economics for the public purpose, I think the objective of a JG with a living wage is what we should be pushing for.

The Mosler plan looks geared to providing the private sector with cheap labor. If the government is paying $8/hr for temp jobs when the private sector is paying $9 for more permanent ones. All this does is encourage the private sector to push their wage scales to as close to $8/hr as they can. On the other hand, mandate a living wage as the minimum wage and have jobs guarantee provide longer term jobs and private industry will actually have to compete with the JG for workers.

And really who cares if this is disruptive. To undo and restructure to get us to a stabler, fairer, unkleptocratic system is going to be disruptive. We want disruptive. Reformism is dead. You can't reform a kleptocracy. The essence of reform is that the underlying system is solid. Reform can be non-disruptive for this reason. It is a tweaking of an essentially good system. But that isn't what we have. A kleptocracy is bad even in its fundamentals. So reform is pointless. Non-disruption of a bad system is the very thing we don't want.

As for aid to the states, we need to a better feel for what the states need. What were their budgets say over the last 5 years. You see if they have been forced to cut back over that period and you provide aid to the current low baseline, you aren't stimulating them so much as keeping them on life support at crisis levels.

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